WESTMINSTER REFLECTIONS: Sir Bernard Jenkin MP asks if there is ‘no deal,’ is that Brexit ‘done’?
Here are two questions. First, is Brexit done already? Answer: no. The UK and the EU are (at the time of writing) deadlocked in talks on the terms on which British and EU businesses will trade in the long-term after the UK’s exit from the transition period. While the UK is no longer a member of the EU, the UK is legally still in the EU’s customs union and internal market (the ‘single market’) with all the legal obligations that involves. Secondly, if there is ‘no deal,’ will Brexit be ‘done’ at the end of this period? Answer: no. Few seem to realise this.
The UK’s position is that it wants a trade deal similar to the EU-Canada FTA: elimination of nearly all tariffs, mutual recognition of professional qualifications, institutional cooperation in a number of areas and otherwise full regulatory autonomy. Tailoring an EU-UK FTA for the UK’s economy means a greater focus on reciprocal access for services, in which we are net exporters, particularly for financial services. Any deal that gives tariff free access for the EU’s massive surplus of goods exports to the UK, but without reciprocal access for UK services exports to the EU would be unacceptable. However, ‘no deal’ would be nothing like ‘no deal’ before the Withdrawal Agreement was signed.
Much of the Withdrawal Agreement (WA) would persist and new terms would come into effect from 1 January 2021, in particular, the Northern Ireland (NI) Protocol. This provides that NI, but not the rest of the UK, would remain subject to the EU’s customs laws and procedures, and to large portions of its internal market laws, under threat of enforcement by the EU Commission and the Court of Justice of the EU (CJEU). The EU’s rules on state aid would also continue to apply. This clause can be interpreted widely, allowing the EU to impose their state aid regime on any UK policy which they consider impacts, in any way, on goods which are traded between NI and the EU. This applies not only to NI, but also to goods originating from Great Britain. Given the deep links between NI and the rest of the UK, there is nothing to prevent this clause being used as a means to continue applying EU policy to large areas of the economy of a country that has formally left the bloc. The UK is right to refuse such terms in the EU-UK FTA.
A third question: could the Withdrawal Agreement terms be considered stable for the long term? Answer: no. Agreeing to continued CJEU jurisdiction with direct applicability and direct effect could not in any way be considered as taking back control. Customs and regulatory barriers will be imposed down the Irish Sea between Great Britain and NI – a wedge (as well as lots of red tape) between what are two parts of the same country. UK mainland-based businesses trading in goods with Northern Ireland would have to pay tariffs at the EU Common External Tariff rate, if the EU considers them to be ‘at risk’ of travelling on to the EU.
We only have a WA because eurosceptic Conservatives, such as myself, voted for it to help the nation out of a paralysing political crisis. To his credit, the Prime Minister had ameliorated Mrs May’s agreement. At least it allows Great Britain to leave the EU’s single market, thereby allowing the free trade benefits of leaving the EU to be realised. It also allows the UK government to reimburse the tariffs paid on any goods moving from Great Britain to NI. We made clear, however, that this agreement was barely ‘tolerable’ and only voted for it against assurances given by government: that it was just a starting point for negotiations; that it would be superseded by a full FTA; and, if needs be, could be repudiated. Indeed, the Withdrawal Agreement Act makes clear that “the Parliament of the United Kingdom is sovereign” and so can repeal any “directly applicable or directly effective EU law.”
The PM and our 2019 manifesto both made clear we will “take back control of our laws” but it is becoming clear the EU may still not accept this and perhaps never intended for the WA to be superseded. Any deal to disentangle the UK from the EU’s regulatory orbit must exclude the EU’s power to impose ‘level playing field’ provisions; prevent the UK’s state aid regime from being subject to control by the EU’s laws or courts; deliver full UK control of our own fishing waters and fish stocks; remove any suggestion that we are trapped in permanent transition; and provide a platform for the UK’s future prosperity through the high-value areas of our economy, particularly services.
The UK’s first priority must be to try to negotiate these terms. But if the EU is unwilling, there are only two options. The first is to enact domestic legislation that will largely nullify the direct effect and direct applicability of the EU laws. We have the mandate and majority to do this. If the EU still insists on the Withdrawal Agreement terms beyond what is reasonable, then the UK must also be ready to repudiate it. I hope it is not necessary, but if it is the only way to achieve UK prosperity and the kind of sovereign independence which is the democratic right of any nation recognised under the UN Charter, then so be it. And most other nations would respect us for that.